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Public control is gaining support
Presently, three-quarters of the industry is already under public ownership when, under Tony Blair’s administration, the Transport Secretary Stephen Byers took control of the big stations, signals and track after the collapse of Railtrack in 2001.
The move by Labour is nothing new as it is one of Labour’s pillars of injustice that they see as putting a wrong right. As we see, the East Coast line is proof that a publicly owned service is viable.
At the 2014 Labour Conference Transport Secretary Mary Creagh cited the accomplishment of the publicly owned East Coast line and why the government-owned company ‘Directly Operated Railway’ (DOR) were not allowed to bid for the franchise, despite its success.
Publicly owned success
The Labour government took the line under public control in 2009 after its private operator, National Express, walked away when revenues fell during the financial crisis.
Within six months of DOR taking control, the line saw levels of punctuality not achieved by any operator of the East Coast mainline since records in their current form began; even when they experienced poor weather conditions at the latter part of the year.
At the end of its 5 year tenure, DOR returned over £1bn in premiums, as well as several million in profits, to the Treasury. Detailed financial analysis from the Office of Rail Regulation showed it was only one of two firms to make a net contribution to government coffers over its last two years of operation, paying in more than it received in subsidy or indirect grants.
Before it was returned to the private sector, with Virgin and Stagecoach taking over management on 1 March 2015, DOR achieved the highest passenger satisfaction level of any long-distance franchise – 94 per cent. By the autumn, satisfaction with the line had fallen to 89 per cent, bringing it in line with the UK’s other privatised long-distance railways line.
In the summer of 2017 the signs of disaster were looming for the private company when Stagecoach was forced to pay out £84.1 million to prop up its 90% ownership of the loss-making east coast mainline rail service.
As of February 2018 it looks like the joint owned company may be calling on the government for a bail out following its admission that it overbid after promising to pay £3.3bn to run the service until 2023. Virgin Trains East Coast argues the fault lies with a less-than-expected increase in passenger numbers that they say has led to losses of £200m.